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Gains from Fragmentation at the Firm Level: Evidence from Japanese Multinationals in East Asia

Author

Listed:
  • Kazunobu HAYAKAWA

    () (Inter-disciplinary Studies Center, Institute of Developing Economies, Japan)

  • Fukunari KIMURA

    (Economic Research Institute for ASEAN and East Asia Faculty of Economics, Keio University, Japan)

  • Toshiyuki MATSUURA

    (The Institute of Economic Research, Hitotsubashi University, Japan)

Abstract

The unprecedented development of production networks in East Asia has been investigated, both theoretically and empirically, employing the conceptual framework of fragmentation theory and its extensions. However, the benefits of production fragmentation at the firm level, particularly benefits deriving from different location advantages, have never been directly measured empirically. This paper presents the very first attempt, to the authors' knowledge, to empirically capture the benefits of fragmentation. Specifically, using Japanese firm-level data, we find that the larger the gap in the capital-labor ratios between fragmenting firms' home and overseas activities, the more greatly their cost efficiency improves.

Suggested Citation

  • Kazunobu HAYAKAWA & Fukunari KIMURA & Toshiyuki MATSUURA, 2009. "Gains from Fragmentation at the Firm Level: Evidence from Japanese Multinationals in East Asia," Working Papers d010, Economic Research Institute for ASEAN and East Asia (ERIA).
  • Handle: RePEc:era:wpaper:d010
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    File URL: http://www.eria.org/ERIA-DP-2009-07.pdf
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    Cited by:

    1. Kimura, Fukunari & Obashi, Ayako, 2011. "Production Networks in East Asia: What We Know So Far," ADBI Working Papers 320, Asian Development Bank Institute.
    2. Fukunari Kimura, 2009. "The Nature and Characteristics of Production Networks in East Asia: Evidences from Micro/Panel Data Analyses," Global COE Hi-Stat Discussion Paper Series gd09-093, Institute of Economic Research, Hitotsubashi University.

    More about this item

    Keywords

    Firm heterogeneity; multinational enterprises; fragmentation; factor intensity; micro data.;

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business

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